Warren Morgan: Multinational companies must pay their fair share

Warren Morgan

It’s that time of year when many people face the task of completing their tax returns.

It’s that time of year when many people face the task of completing their tax returns.

Most people know that their taxes go towards funding the services they use, the services they rely on to keep them safe, or the services they can turn to when things go wrong.

Peter Mandelson infamously said he was “intensely relaxed about people getting filthy rich as long as they pay their taxes” (a comment he has since rowed back from). And some have been getting very rich indeed.

A year ago a Sunday Mirror investigation found that six major companies alone made some £14 billion in the UK - companies like Apple, Google, Facebook, Amazon, Ebay and Starbucks - yet combined they only paid £41 million in tax. This is because they register their businesses in other countries with lower tax regimes, such as Luxembourg. This is legal under UK law.

The government is losing more than £1 in every £10 it tries to collect from companies to tax evasion and avoidance. The true figure could be more than £12 billion a year, or potentially as much as £34 billion according to the HMRC itself.

It was revealed last month that five of the largest banks in the UK – JP Morgan, Bank of America Merrill Lynch, Deutsche Bank, Nomura Holdings and Morgan Stanley – legally paid no corporation tax in 2014, though they made billions in profits.

As Margaret Hodge MP said to the BBC, HM Revenue and Customs needed to be “more aggressive and assertive in confronting corporate tax avoidance. These global companies are making money in the UK. All we are saying is that if you have economic activities in the UK you are making profits and tax is payable on that.”

Figures released within the last fortnight show that the Chancellor’s efforts to recoup unpaid tax have fallen over £600 million short.

However, the government claimed some success in increasing tax payments by major banks and corporations this week, with well known names like Barclays and Vodafone paying more. The code is however voluntary.

Just before Christmas a new All Party Parliamentary Group on Responsible Taxation was established to put pressure on the government to ensure multinationals pay their fair share.

It will hold meetings in public and ask ministers, tax experts and business people to attend for questions and debate. The first item on the agenda will be how to respond to G20 recommendations to crack down on corporate tax avoidance.

Meanwhile, local councils are seeing their funding being cut by £11 billion, over 40 per cent of what they spend on local services like refuse collection, roads, libraries, parks, social care, schools and children’s centres.

All the time the costs of looking after vulnerable children, older people and those with disabilities is growing fast.

As I wrote last month, the outlook for council funding is very bleak indeed. People are very rightly becoming very angry as both Labour and Conservative-led councils begin to cut what residents see as essential services, with the government hoping that the blame will fall on councillors, not on ministers.

There are many things that unpaid corporate taxes could fund, but as the leader of a council facing cuts of well over £20 million each year, I’m going to make one simple call on the government.

Make multinational companies and banks pay their fare share of taxes on profits they make in this country.

Use some of that money to fund local council services and social care.

Councillor Warren Morgan is the leader of the Labour Group, and leader of Brighton and Hove City Council.